15 April 1994 External T.I. 9401535 - BUSINESS OR PROPERTY INCOME

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether losses incurred by a taxpayer from the operation of a vessel are business or property losses?

Position TAKEN:

Question of fact.

Reasons FOR POSITION TAKEN:

Not aplicable

XXXXXXXXXX		5-940153

Attention: XXXXXXXXXX

April 15, 1994

Dear Sirs:

Re: Business or property income

This is in reply to your letter of October 3, 1994 wherein you requested our interpretation on the losses incurred by a taxpayer from the operation of a vessel. We apologize for the delay in replying.

Written confirmation of the tax implications inherent in particular transactions are given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request. Where the particular transactions are completed, as in your case, the enquiry should be addressed to the relevant District Office. However, we can offer you the following general comments which may be of assistance to you.

The determination of whether the rental of a vessel result in business or property loss for a particular taxation year is a determination of fact to be based on all the circumstances which have not been all provided in your letter. The renting of a vessel by an individual will generally be regarded as a business operation only where services are made available to the renters to such an extent that the rental operation has gone beyond the mere rental of the property. It is the number and kinds of services supplied that will determine whether a particular operation constitutes the carrying of a business.

The delegation by the owner of a vessel of its management to an agent will not in itself alter the nature of the rental income. If the renting of the property would have constituted a business when carried on by the owner himself, it will still be a business when undertaken by an agent on the owner's behalf.

The foregoing opinions are not rulings and, in accordance with the guidelines set out in Information Circular 70-6R2 dated September 28, 1990, are not binding on the Department.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Rulings Directorate